Correlation Between Aecon and Argan
Can any of the company-specific risk be diversified away by investing in both Aecon and Argan at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Aecon and Argan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aecon Group and Argan Inc, you can compare the effects of market volatilities on Aecon and Argan and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Aecon with a short position of Argan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aecon and Argan.
Diversification Opportunities for Aecon and Argan
Significant diversification
The 3 months correlation between Aecon and Argan is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Aecon Group and Argan Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argan Inc and Aecon is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Aecon Group are associated (or correlated) with Argan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argan Inc has no effect on the direction of Aecon i.e., Aecon and Argan go up and down completely randomly.
Pair Corralation between Aecon and Argan
Assuming the 90 days horizon Aecon Group is expected to under-perform the Argan. But the pink sheet apears to be less risky and, when comparing its historical volatility, Aecon Group is 1.84 times less risky than Argan. The pink sheet trades about -0.23 of its potential returns per unit of risk. The Argan Inc is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 14,303 in Argan Inc on November 3, 2024 and sell it today you would lose (623.00) from holding Argan Inc or give up 4.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aecon Group vs. Argan Inc
Performance |
| Timeline |
| Aecon Group |
| Argan Inc |
Aecon and Argan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aecon and Argan
The main advantage of trading using opposite Aecon and Argan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aecon position performs unexpectedly, Argan can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Argan will offset losses from the drop in Argan's long position.The idea behind Aecon Group and Argan Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Argan vs. Arcosa Inc | Argan vs. Construction Partners | Argan vs. Topbuild Corp | Argan vs. Comfort Systems USA |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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